10 Apr 2018 07:00
Severstal reports Q1 2018 operational results
Moscow, Russia - 10 April 2018 - PAO Severstal (MICEX-RTS: CHMF; LSE: SVST), one of the world's leading vertically integrat--ed steel and steel-related mining companies, today announces its operational results for Q1 2018.
Q1 2018 GROUP HIGHLIGHTS
· Hot metal output remained almost unchanged at 2.35 mln tonnes (Q4 2017: 2.34 mln tonnes) compared with the previous quarter, and crude steel production marginally increased 1% to 3.03 mln tonnes (Q4 2017: 3.01 mln tonnes).
· Consolidated steel product sales increased 3% to 2.86 mln tonnes compared with the previous quarter (Q4 2017: 2.78 mln tonnes). Meanwhile, the Company reduced steel product stock levels at its export subsidiaries in Q1 2018. Growth in semi-finished product volumes was driven by a change in the structure of product mix and increased demand for billets.
· The Company increased export sales volumes to 48% (Q4 2017: 42%) due to increased profitability of export deliveries. The share of high value-added (HVA) products within the sales portfolio remained high at 45% (Q4 2017: 47%), declining only 2 ppts due to a seasonal change in product mix.
· Coking coal concentrate sales volumes from Vorkutaugol declined 25% affected by the long-wall repositioning at the Vorgashorskaya mine impacting production of "GZHO" grade concentrate. Meanwhile the Company managed to keep production of "2ZH" grade coal stable, fully matching the production needs of CherMK.
· Iron ore pellet sales decreased 28% and totalled 2.38 mln tonnes (Q4 2017: 3.30 mln tonnes) after the realisation of a significant share of finished goods in transit in Q4, shifted from the previous quarter, and an increased share of goods in transit in Q1 2018, which will be realised in subsequent periods.
· Iron ore concentrate sales were up 14% q/q to 1.29 mln tonnes (Q4 2017: 1.14 mln tonnes) despite the seasonal slowdown in production at Olkon. Iron ore concentrate sales improvement in Q1 2018 reflects the consolidation of the Yakovlevskiy mine and stock sell-off at Olkon.
· In Q1 2018 steel and raw material demand remained high. Global steel prices were supported by winter restrictions in China and seasonal increased Chinese demand in March, which contributed towards higher prices of raw materials. Additionally, HCC prices were high due to various supply disruptions in Australia and iron ore prices were high as a result of higher steel margins in China and stronger demand for high quality iron ore. Russian export prices, which are currently exceeding Chinese export prices due to steady demand in most consuming regions, are expected to follow global trends in Q2 2018.
· In 2018, Severstal Resources anticipates an increase in production volumes of 40kt of pellets at Karelsky Okatysh and 370kt of coking coal concentrate at Vorkutaugol. Yakovlevskiy mine's iron ore output is estimated to be c.1.3 million tonnes for 2018. Severstal Russian Steel production volumes growth will be positively impacted by a new ladle furnace (+75kt of crude steel) and a new HDG (+400kt) and colour-coating (+200kt) unit.
SUMMARY OF KEY PRODUCTION, SALES VOLUMES
Production, tonnes | Q1 2018 | Q4 2017 | Change, % | Q1 2018 | Q1 2017 | Change, % |
Crude Steel (Russian Steel) | 3,033,094 | 3,012,107 | 1% | 3,033,094 | 2,863,947 | 6% |
Hot metal (Russian Steel) | 2,347,372 | 2,343,386 | 0% | 2,347,372 | 2,341,719 | 0% |
Sales volumes, tonnes | Q1 2018 | Q4 2017 | Change, % | Q1 2018 | Q1 2017 | Change, % |
Coking coal concentrate | 628,463 | 832,559 | (25%) | 628,463 | 710,622 | (12%) |
Iron ore pellets | 2,376,920 | 3,297,251 | (28%) | 2,376,920 | 2,579,417 | (8%) |
Iron ore concentrate | 1,291,529 | 1,136,650 | 14% | 1,291,529 | 802,939 | 61% |
Total steel products (Consolidated) | 2,864,783 | 2,784,373 | 3% | 2,864,783 | 2,530,181 | 13% |
Total steel products (Russian Steel) | 2,874,862 | 2,792,509 | 3% | 2,874,862 | 2,540,351 | 13% |
High value added steel products, % | Q1 2018 | Q4 2017 | Change, % | Q1 2018 | Q1 2017 | Change, % |
Severstal (Consolidated) | 45% | 47% | (2 ppts) | 45% | 44% | 1 ppts |
Severstal Russian Steel | 45% | 47% | (2 ppts) | 45% | 44% | 1 ppts |
SEVERSTAL'S CONSOLIDATED SALES (NET OF INTERCOMPANY SALES)
Sales volumes, tonnes | Q1 2018 | Q4 2017 | Change, % | Q1 2018 | Q1 2017 | Change, % | |
Coal: | 403,842 | 418,486 | (3%) | 403,842 | 473,233 | (15%) | |
Coking coal concentrate | 46,126 | 57,687 | (20%) | 46,126 | 7,677 | 501% | |
Steam coal | 357,716 | 360,799 | (1%) | 357,716 | 465,556 | (23%) | |
Iron ore: | 1,441,068 | 2,239,773 | (36%) | 1,441,068 | 1,341,387 | 7% | |
Iron ore pellets | 1,187,612 | 2,159,754 | (45%) | 1,187,612 | 1,341,387 | (11%) | |
Iron ore concentrate | 253,456 | 80,019 | 217% | 253,456 | 0 | n.a. | |
Semi-finished products | 256,159 | 217,935 | 18% | 256,159 | 117,042 | 119% | |
Rolled products: | 2,166,456 | 2,073,440 | 4% | 2,166,456 | 2,006,200 | 8% | |
Hot-rolled coil | 963,107 | 905,081 | 6% | 963,107 | 984,077 | (2%) | |
Hot-rolled plate | 198,205 | 239,361 | (17%) | 198,205 | 193,298 | 3% | |
Cold-rolled coil | 388,586 | 306,426 | 27% | 388,586 | 320,186 | 21% | |
Galvanised and metallic coated coil | 198,400 | 176,104 | 13% | 198,400 | 117,517 | 69% | |
Colour coated coil | 67,294 | 84,791 | (21%) | 67,294 | 84,404 | (20%) | |
Long products | 350,864 | 361,677 | (3%) | 350,864 | 306,718 | 14% | |
Downstream products: | 442,168 | 492,998 | (10%) | 442,168 | 406,939 | 9% | |
Metalware products | 128,251 | 129,123 | (1%) | 128,251 | 144,429 | (11%) | |
Large diameter pipes | 118,910 | 166,189 | (28%) | 118,910 | 68,367 | 74% | |
Other tubes, pipes, formed shapes | 195,007 | 197,686 | (1%) | 195,007 | 194,143 | 0% | |
SEVERSTAL RESOURCES
· Coking coal concentrate sales volumes from Vorkutaugol declined 25% affected by the long-wall repositioning at the Vorgashorskaya mine impacting production of "GZHO" grade concentrate. Meanwhile the Company managed to achieve stable production of "2ZH" grade coal, fully matching the production needs of CherMK. Internal coking coal concentrate procurement remained unchanged at 93% in Q1 2018 while the minor volumes allocated by Vorkutaugol to external sales remained almost flat q/q.
· Steam coal sales at Vorkutaugol remained high, declining only 1% q/q reflecting stronger demand from domestic consumers influenced by the ongoing heating season.
· Iron ore pellet sales decreased 28% and totalled 2.38 mln tonnes (Q4 2017: 3.30 mln tonnes) after the realisation of a significant share of finished goods in transit in Q4, shifted from the previous quarter, and increased share of goods in transit in Q1 2018, which will be realised in subsequent periods.
· Iron ore concentrate sales were up 14% q/q to 1.29 mln tonnes (Q4 2017: 1.14 mln tonnes) despite the seasonal slowdown in production at Olkon. The improvement of iron ore concentrate sales in Q1 2018 reflects the consolidation of the Yakovlevskiy mine and stock sell-off at Olkon.
Sales volumes, tonnes | Q1 2018 | Q4 2017 | Change, % | Q1 2018 | Q1 2017 | Change, % |
Coal: | 986,249 | 1,193,359 | (17%) | 986,249 | 1,176,178 | (16%) |
Coking coal concentrate | 628,463 | 832,559 | (25%) | 628,463 | 710,622 | (12%) |
Steam coal | 357,786 | 360,800 | (1%) | 357,786 | 465,556 | (23%) |
Iron ore: | 3,668,449 | 4,433,901 | (17%) | 3,668,449 | 3,382,356 | 8% |
Iron ore pellets | 2,376,920 | 3,297,251 | (28%) | 2,376,920 | 2,579,417 | (8%) |
Iron ore concentrate | 1,291,529 | 1,136,650 | 14% | 1,291,529 | 802,939 | 61% |
SEVERSTAL RUSSIAN STEEL ('RSD')
· RSD steel product sales increased 3% to 2.87 mln tonnes compared with the previous quarter (Q4 2017: 2.79 mln tonnes). Meanwhile, the Company reduced steel product stock levels at its export subsidiaries in Q1 2018. Semi-finished product volumes growth was driven by the change in structure of product mix and increased demand for billets.
· The Company increased export sales volumes to 48% (Q4 2017: 42%) due to higher profitability of export deliveries at the beginning of the year. The share of high value-added (HVA) products within the sales portfolio remained high at 45% (Q4 2017: 47%) declining only 2 ppts due to a seasonal change in product mix.
· Severstal increased its sales of the HDG and cold-rolled coil products to the U.S. market and hot-rolled coil to European destinations due to the attractive pricing environment.
· Large diameter pipe sales volumes declined 28% q/q, followed by H2 2017 destocking of finished goods produced in the beginning of 2017 at Izhora Pipe Mill. In March 2018, Izhora Pipe Mill won a tender to supply around 165kt of LDPs for Gazprom projects during 2018-2019.
· Average selling prices for the majority of steel products remained high in Q1 2018 following global trends. Export steel prices were supported by winter steel production restrictions in China. Domestic prices were catching up with global price trends but with a time lag, resulting in more attractive selling prices at export destinations for some products. The decline in semi-finished product average selling prices was a result of a higher share of billets in the product mix.
Sales volumes, tonnes | Q1 2018 | Q4 2017 | Change, % | Q1 2018 | Q1 2017 | Change, % |
Total steel products | 2,874,862 | 2,792,509 | 3% | 2,874,862 | 2,540,351 | 13% |
Semi-finished products | 256,159 | 217,935 | 18% | 256,159 | 117,042 | 119% |
Rolled products: | 2,176,290 | 2,081,329 | 5% | 2,176,290 | 2,016,107 | 8% |
Hot-rolled coil | 963,278 | 905,157 | 6% | 963,278 | 984,350 | (2%) |
Hot-rolled plate | 198,240 | 239,404 | (17%) | 198,240 | 193,491 | 2% |
Cold-rolled coil | 388,586 | 306,427 | 27% | 388,586 | 320,186 | 21% |
Galvanised and metallic coated coil | 198,400 | 176,104 | 13% | 198,400 | 117,517 | 69% |
Colour coated coil | 67,294 | 84,791 | (21%) | 67,294 | 84,404 | (20%) |
Long products | 360,492 | 369,446 | (2%) | 360,492 | 316,159 | 14% |
Downstream products: | 442,413 | 493,245 | (10%) | 442,413 | 407,202 | 9% |
Metalware products | 128,411 | 129,283 | (1%) | 128,411 | 144,511 | (11%) |
Large diameter pipes | 118,910 | 166,189 | (28%) | 118,910 | 68,367 | 74% |
Other tubes, pipes, formed shapes | 195,092 | 197,773 | (1%) | 195,092 | 194,324 | 0% |
Sales price, $/tonne | Q1 2018 | Q4 2017 | Change, % | Q1 2018 | Q1 2017 | Change, % | |||||
Semi-finished products | 428 | 468 | (9%) | 428 | 374 | 14% | |||||
Hot-rolled coil | 551 | 535 | 3% | 551 | 481 | 15% | |||||
Hot-rolled plate | 741 | 716 | 3% | 741 | 569 | 30% | |||||
Cold-rolled coil | 626 | 610 | 3% | 626 | 602 | 4% | |||||
Galvanised and metallic coated coil | 734 | 723 | 2% | 734 | 708 | 4% | |||||
Colour coated coil | 899 | 891 | 1% | 899 | 908 | (1%) | |||||
Long products | 496 | 466 | 6% | 496 | 435 | 14% | |||||
Metalware products | 1,013 | 961 | 5% | 1,013 | 899 | 13% | |||||
Large diameter pipes | 1,284 | 1,315 | (2%) | 1,284 | 1,443 | (11%) | |||||
Other tubes, pipes, formed shapes | 602 | 579 | 4% | 602 | 570 | 6% | |||||
Notes | |||||||||||
1) All production data is reported in metric tonnes;
2) Sales prices are stated on EXW basis;
3) Segmental data includes intercompany sales;
4) Semi-finished products include pig iron, slabs, billets, ingots, steel casting and forgings;
5) Large diameter pipes include all pipes with a diameter between 820 and 1420 mm.
Contacts |
Investor Relations
Evgeny Belov
T: +7 (495) 926-77-66 ext. 6445
evgenii.belov@severstal.com
Public Relations
Anastasia Mishanina
T: +7 (495) 926-77-66 ext. 6457
anastasia.mishanina@severstal.com
Severstal's financial communications agency - Hudson Sandler
Andrew Hayes / Emily Dillon / Dan de Belder
T: +44 (0) 20 7796 4133
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PАО Severstal is one of the world's leading vertically integrated steel and steel related mining companies, with assets in Russia, Ukraine, Latvia and Poland. Severstal is listed on RTS and MICEX and the company's GDRs are traded on the LSE. Severstal reported revenue of $7,848 million and EBITDA of $2,577 million in 2017. Severstal's crude steel production in 2017 reached 11.7 million tonnes www.severstal.com